A large and well-known tech company seeks deep tax incentives to build a server farm in an open pasture in suburban Utah.
The company would invest millions of dollars, bringing hundreds of construction jobs, but once it’s built it would take far fewer jobs to keep the server farm running. It also would take a large chunk of water to keep the servers cool.
Is Eagle Mountain’s bid to build a data center between a mink farm and a sewer plant a replay of West Jordan’s 2016 bid for Facebook to build a data center on a dry farm on the west side of the Salt Lake Valley?
Pretty close. It may even be the same company.
West Jordan’s $240 million incentive package ultimately was withdrawn after it took too many political hits. Will Eagle Mountain fare better?
Eagle Mountain has changed a few terms. For one thing, the incentive package is $150 million over 20 years instead of $240 million.
For another, Eagle Mountain has the company’s commitment to spend $100 million on roads and utilities that will encourage more development. In West Jordan, there was a belief it would bring more development, but not the contractual commitment to infrastructure.
Eagle Mountain also structured its deal in a way that means fewer public agencies have to sign off. The Utah Board of Education’s limitations were the last straw in West Jordan. The state board isn’t involved this time.
The Alpine School District signed off Wednesday, just as Jordan School District had done on West Jordan’s plan. Both are among the lowest per-pupil spenders in the state, and both were willing to offer tax breaks for the hope of long-term revenue.
The Central Utah Water Conservancy District is also on board, and that’s important. Concerns about huge amounts of water needed to cool a data center worked against West Jordan’s bid. Our state is dry and getting drier. Those concerns may be different in Eagle Mountain, but they don’t go away.
The forces that brought forth the West Jordan deal are still at work. The storage and consumption of data are growing at a staggering rate that may someday make data centers as common as Walmarts. (Even Walmarts need more data storage.) Proximity also matters, which is why all the data centers aren’t built above the Arctic Circle.
So the question becomes less about whether data centers belong here and more about how much we have to encourage them with tax breaks. If this new company is still the same as the old company (Facebook), then it’s noteworthy that the incentive has dropped by almost 40 percent in two years. It also raises the question of whether there really was a competition for the West Jordan project. New Mexico supposedly won that by digging deep, but now Facebook possibly still wants a Utah facility.
Economic development incentives are a poker game. The Eagle Mountain deal is a sign that Utah is getting better at it.